By Charlie Charalambous
IN THE face of stiff opposition to its plans, the government appears ready to concede partial defeat on extending defence levy increases until December 2002.
“Due to the differing points of view, the government is willing to accept a temporary increase of one year to give time for negotiations on alternatives.”
This was the message taken to yesterday’s closed House Finance Committee meeting by Finance Minister Takis Clerides.
He told committee members that the government was ready to compromise on the issue by only proposing that the levy increases remain in place for one year — until next June — instead of three-and-a-half.
It is understood the minister dismissed George Vassiliou’s suggestion that increases in VAT should replace the levy hike and Akel’s proposal that payment of the levy should be income-related.
Clerides argued that VAT would need to increase by at least four per cent for the government to make any savings and said Akel’s suggestion was unworkable.
The government hit choppy seas when Akel and Diko both said they would be reluctant to support the defence levy extension bill submitted to the House last month.
Disy and Edek said they would approve the temporary extension until 2002.
Current legislation raising compulsory defence contributions from two to between three and four per cent is up for review at the end of this month.
The initial defence levy hike last August from two to three per cent was eventually passed by a majority of one on the proviso that it be reviewed every six months.
In December 1998, the blanket levy was passed for a further six months, with certain individuals and organisations being put in the four per cent bracket.
Diko and Akel’s objections focus on what they see as the government’s failed missile policy and redundant defence strategy. They argue the levy hike was only approved because of the government’s commitment to the Russian S-300 missiles, which were unceremoniously diverted to Crete after the December 22 vote in the House last year.
With the Clerides administration also proposing a comprehensive £140 million tax package, the opposition is aware that additional wage cuts would cause a storm of public protest — especially when the government has fallen short of its military spending pledge and has nothing but a huge defence fund deficit to show for it.
